American News Update

News

Stock market gets life from energy sector after Trump’s Iran move boosts oil

Stock market gets life from energy sector after Trump’s Iran move boosts oil
May 14
16:29 2018

The Dow on Wednesday booked a fifth gain in a row and the broader stock market rallied as sharp gains in energy, financials and technology stocks propelled the main benchmarks firmly higher.

Energy-related stocks scored a lift after President Donald Trump’s decision a day earlier to pull the U.S. out of the Iran nuclear deal and resume sanctions against the oil-producing nation prompted investors to bet on higher prices ahead for the commodity.

What are markets doing?

The S&P 500 SPX, +0.09% gained 25.87 points to 2,697.79, a gain of 1%, with nine of the 11 main sectors finishing higher.

Energy shares jumped 2%, by far the best performer among the S&P 500 sectors. But gains were broad based, with financials, material, industrials and technology sectors each gained more than 1%. Meanwhile, telecoms and utilities were the only laggards, down 1.1% and 0.8%, respectively.

The Nasdaq Composite Index COMP, +0.11% added 73.00 points, or 1%, to 7,349.91.

The Dow Jones Industrial Average DJIA, +0.27% rose 182.33 points, or 0.8%, to 24,542.54, with 23 of the 30 blue-chip companies finishing in positive territory. Walmart IncWMT, +1.21% led losses, while DowDuPont IncDWDP, +0.90% led Dow component gainers.

What is driving the market?

A rally in oil prices helped lift U.S.-listed energy companies. West Texas Intermediate oil CLM8, +0.55% jumped 3%, to settle at $71.14 a barrel. Trump said the U.S. intends to impose sanctions on Iran, curbing the country’s oil exports and tightening global oil supply.

Also affecting oil markets were data from the Energy Information Administration, which showed that crude-oil stockpiles fell more than expected in the latest week.

Among Federal Reserve speakers, Atlanta Fed President Raphael Bostic, on Wednesday, said he believed that stimulus to investment spending from the recent Republican tax cut package may be being dampened by uncertainty over changes in U.S. trade policy, speaking at the World Affairs Council in Jacksonville, Fla. Bostic is a voting member of the Fed’s rate-setting Federal Open Market Committee.

 Will Trump’s Iran Bet Pay Off?
What are strategists saying?

“A lot of people had reduced their exposure to stocks ahead of Trump’s announcement on Iran on Tuesday and when the markets did not sell off, traders went back in. What we are seeing today looks like a relief rally that took the S&P 500 to the high end of its recent range,” said Ian Winer, head of the equities division at Wedbush Securities.

“At least for now, investors are not anticipating a big fallout from the Iran sanctions. That may change however,” Winer said.

“It’s difficult to discern how much of Trump’s decision was priced into stocks, and how big of a risk it represents, though it is certainly helping to sustain and extend the crude-oil rally today,” said Ryan Crane, who oversees $5 billion in assets as chief investment officer at Stephens Investment Management Group.

Stock movers

TripAdvisor Inc. TRIP, -0.65%  soared 23% after the online travel-booking service late Tuesday released results that topped Wall Street estimates.

Electronic Arts Inc. EA, -0.21%  climbed 5.8%, boosted by positive analyst commentary following its quarterly results.

Dow component Walt Disney Co. DIS, +0.36%  fell 1.8% even after its earnings out late Tuesday beat forecasts. Its results were boosted by performance at its movie-studio arm after the huge success of “Black Panther.”

See: Disney’s approach to streaming ESPN could shape the future of TV

Walmart shares WMT, +1.21% fell 3.1% after the retail giant said it was taking control of India’s largest e-commerce company, Flipkart Group, for $16 billion, as the Bentonville, Ark.-based company tries to fend off Amazon.com IncAMZN, -0.09% at home and abroad.

Shares of Monster Beverage Corp. MNST, -0.69%  sagged 7.5% a day after it posted earnings below forecasts.

Shares of Papa John’s International Inc. PZZA, -3.22%  fell 3.7%. The pizza chain late Tuesday reported a decline in quarterly sales.

Shares of ADT IncADT, -1.35%  tumbled 8.8%, a day after the home-security company reported its first-quarter results.

Coty IncCOTY, -1.05% slumped 5.6% after it reported adjusted third-quarter earnings that topped expectations, along with better-than-expected revenue.

Mylan NV MYL, -0.39% rose 3.8%. It reported first-quarter earnings that came in below analyst forecasts.

What’s on the economic calendar?

The producer-price index rose 0.1% in April, below forecasts. The core PPI was also up 0.1%.

Separately, U.S. wholesale inventories rose 0.3% in March.

What are other markets doing?

Asian markets closed mixed, while European stock SXXP, -0.05% finished at a more-than-three-month high, aided by gains in energy stocks. Gold prices GCM8, -0.55%shed 70 cents, or less than 0.1%, to settle at $1,313 an ounce.

The yield on 10-year U.S. notes TMUBMUSD10Y, +1.02%  rose back above 3%The dollar index DXY, +0.10%  edged lower, off 0.1% at 93.04.

Share

About Author

American News Update

American News Update

Related Articles